Mitsubishi breaks even after costly rebirth

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MITSUBISHI Australia's near-death experience and subsequent
reconstruction sent the local car industry spiralling to a
break-even result in 2004 despite record sales in the new vehicle
market.

The industry's report card, now complete with the Mitsubishi and
Toyota results, shows a patchy performance, with the four local
makers, in general, missing out on much of the domestic market's 5
per cent growth.

All up, and including exports, the local car makers sold 696,000
cars and trucks, a gain of 1.69 per cent. Revenue was up 3.79 per
cent, indicating a rise in the average value of cars sold.

But industry earnings were virtually eliminated by the need to
rebuild Mitsubishi's balance sheet as part of Mitsubishi Motors
Corporation's revitalisation plan.

The huge write-offs sent the company plunging to a loss of $588
million for the year to March 31, offsetting almost all the profits
posted by the other three companies.

Mitsubishi more than halved its trading loss, from $220 million
to $108 million. Mr Phillips said a further improvement of $100
million could be expected in the current financial year.

"We will be well and truly back in the black by the end of this
financial year  there's no doubt about that," he said, adding
that the forecast took into account the expense of the run-out of
the old XR model and the launch of the new 380.

Mr Phillips said the speculation about the future of the
company, both here and in Japan, had unnerved buyers and made 2004
a dreadful year.

"We were dead and buried by October," he said. "That's why we
started the corporate recognition campaign."

That campaign had restored a lot of confidence in the company
and its dealer network, he said.

The new 380 would have a 3.8-litre V6 engine and would be aimed
at the private buyer in the six-cylinder car segment, the biggest
in the market, he said.

"The six-cylinder segment has shrunk as a percentage of the
overall market, but there are still a bucketload of cars sold
there. We're not out to be market leader. We just want our 2500 a
month and we'll be happy."

Apart from the $108 million trading loss, Mitsubishi wrote off
$385 million of assets, including a $78 million investment in a
larger version of the new car cancelled late in the program.

Other costs included $95 million for retrenchments after the
Lonsdale engine plant closure.

The GM Holden profit of $335 million for 2004 was boosted by a
$170 million abnormal gain on the sale to parent company General
Motors of intellectual property, believed to be the design for the
Zeta platform that will underpin the next Commodore. The parent
cancelled its Zeta program earlier this year.